User blog:Kirk/Whether to Own or Not
At some point in most peoples lives, the above question will come up. It is a question whose answer is dependent on the answers to several other questions. Financial Affordability There are two parts to this question. Income and Savings. :Income helps determine how big a monthly mortgage payment you can safely handle. Your monthly payment shouldn't exceed 20% of your monthly paycheck. :Savings determines how much of a down payment you can handle. From a fiscally conservative standpoint, the down payment should cover 20% of the cost of buying a home of your own. However 10% is often considered okay in the absence of a housing bubble. In the event of a housing bubble, you really don't want to be seriously seeking to buy a new home as prices are going to be over-inflated beyond their actual worth. How do you know if we're in a housing bubble? Look at the size of the down payment required. If banks are accepting 5% down payments consider it a potential warning. If zero down mortgages are available, a bubble is in progress. And absolutely never touch an "Interest Only Mortgage", you don't want to be holding one of those loans when the Bubble finally pops. Right now, however, is probably a very good time to be looking if you got the money saved for the down payment, and your income is secure enough for the monthly mortgage payment. Stability vs Mobility Assuming affordability, the next question is "How long do you plan to stick around?" If you have expectations of moving to another area in the next few years, you are probably better off renting until you get to wherever you will be going to. Criteria for Purchasing Before you start looking in earnest for your future home, it helps to consider what your ideal home should consist of. #Amount of Space - You don't want to buy too small. But you don't want to buy too big either. Remember, the bigger the house, the bigger the heating bill. #Maintenance - This is a given. The only question is who will do it. As a renter the responsibility belongs to your Landlord. As a Homeowner, the responsibility will be yours. # Yards & Gardens - In looking at places over the course of two years, I've noticed there are quite a few places that have neither. Given that I wanted a place where I could grow stuff, I got in the habit of not looking too closely at such places. At the same time, you might want to consider just much you are ready to take on. It is not necessarily the case that gardening is supposed to be a challenge or laborious. #Availability of Amenities - Depending on your circumstances, in may be useful to know what your mass transit options are. You are going to want relatively easy access to whatever stores and services are important to you. If you can answer yes to the first two questions, and your set of criteria can be achieved, then now is quite possibly a very good time to be looking for that new home to be living in. Category:Blog posts Category:Selecting